Games Without Frontiers

War has changed in network society. Of course, we are familiar with the asymmetrical networked warfare taking place in Iraq and Afghanistan. Then there's the emerging cyberwar, which recently ratcheted up as Google complained it was the victim of cyber attacks originating in China. The new issue of the Atlantic has more.

But there's also economic warfare. What we see now is hardly a typical recession from which we will recover in the next year. On the contrary, part of a prolonged condition that will define this decade. Obviously, much of it is the product of astonishing foolishness on the part of governments, corporations, and individuals, all of whom seem to have been so hopped up on prozac that they thought that the good times would never end and that they could continue with their profligate policies for all eternity. As symbols of the old new economy are dying (goodbye and good riddance Hummer, sorry Athens—home of the 2004 Summer Olympics—and Dubai), and the crisis is crippling US cities and states (look at what's happening in Los Angeles, for example), we should ask if there isn't a touch of new war in all this.

Now I don't mean to turn to conspiracy theory, but I want to use this as an opportunity to suggest that our current economic crisis has its roots not just in rank stupidity and blind greed but also in other, murkier, conditions. Two seemingly opposed but complimentary plots come to mind. The first is China's. Back in 1999, two high-ranking officials of the Chinese military wrote a book called "Unrestricted Warfare." You can find excerpts at Cryptome. In this book, which is commonly understood to have been written to be read by the military, the first Gulf War was given as an example of how war had changed to become less directly violent, but also more pervasive (remember Peter Gabriel's song?). China's response against an adversary with technological superiority would be to pursue unrestricted warfare. In particular, economic war becomes part of the scenario. Here's a quote:

…in this era of economic integration, if some economically powerful company wants to attack another country's economy while simultaneously attacking its defenses, it cannot rely completely on the use of ready-made means such as economic blockades and trade sanctions, or military threats and arms embargoes. Instead, it must adjust its own financial strategy, use currency revaluation or devaluation as primary, and combine means such as getting the upper hand in public opinion and changing the rules sufficiently to make financial turbulence and economic crisis appear in the targeted country or area, weakening its overall power, including its military strength. In the Southeast Asian financial crisis we see a case in which the crisis led to a lowering of the temperature of the arms race in that region. Thus we can see the possibility that this will happen, although in this case it was not caused by some big country intentionally changing the value of its own currency. Even a quasi-world power like China already has the power to jolt the world economy just by changing its own economic policies. If China were a selfish country, and had gone back on its word in 1998 and let the Renminbi lose value, no doubt this would have added to the misfortunes of the economies of Asia. It would also have induced a cataclysm in the world's capital markets, with the result that even the world's number one debtor nation, a country which relies on the inflow of foreign capital to support its economic prosperity, the United States, would definitely have suffered heavy economic losses. Such an outcome would certainly be better than a military strike.

Is it conspiracy theory to suggest this is something the Chinese are thinking about? The Pentagon doesn't think so: they recently held a war game to investigate the consequences of economic warfare against the United States. More recently, US arms sales to Taiwan prompted Chinese military leaders to call for economic countermeasures.

Now, the effects of such a war in a globally-linked economy aren't clear and China could well wind up hurt in the blowback. It might be interesting for the Chinese military leaders to talk to the ghost of France's President Charles de Gaulle, who tried a similar move back in the 1960s by converting dollar reserves to gold only to find himself ousted during the events of May 1968. (N.B. I never knew that the origins of the Peter Gabriel song are in a European television game show that was also inspired by de Gaulle).

In the US we also have an economic civil war of sorts that has been waged by members of the Republican party. "Starving the beast" is a policy that conservatives developed in the 1980s in which they hoped to realize their desires for a smaller federal government by forcing cuts. This could only be accomplished, they argued, by cutting taxes significantly so as to "starve the beast" and provoke governmental downsizing. See this article in the Independent Review, for more. Unfortunately for the conservatives, the beast didn't starve, it was stoked, it simply borrowed more money and our current economic crisis is very much the result. Massive cuts loom, but so do continued expenses that likely will only be fundable by increased taxes.

Playing with economies for ulterior motives is a dangerous measure, but one that I think we've hardly seen the last of in network society. All we can hope for is that we start talking about such madness in public and that, just as Herman Kahn's provocation that we think the unthinkable and contemplate life after nuclear war ultimately brought us to the process of détente, this too will lead us to stop playing silly games.